What Happened
China’s leading ecommerce giant Alibaba has acquired Youku Tudou, China’s leading digital video site, for $3.67 billion. Previously, Alibaba held a 18.3% share in the online video company. Pending regulatory approval, Alibaba will gain access to over 580 million monthly users watching videos on Youku Tudou with this takeover, further bolstering its position in the Chinese digital media market.
Market Impact
To put it as an analogy using their U.S. equivalents, this acquisition is essentially China’s Amazon buying China’s YouTube. This deal provides Alibaba with a new vital channel to reach potential online shoppers and, presumably, to integrate its ecommerce assets, such as payment information and consumer data, to create better, actionable video ads. Meanwhile, Youku Tudou gains Alibaba’s support to help it compete with rival video sites, such as Baidu’s IQiYi and Tencent Videos, and solidify its leading position in the Chinese digital video market.
For brands that have a presence in the Chinese market or looking to enter it, this deal should spell great opportunities to reach Chinese consumers via digital video ads and leverage Alibaba’s consumer data to target the right audience segments for direct sales.
Source: Wall Street Journal
